The Value of an Arbitration Agreement

Arbitration agreements are better solutions than going to court; or receiving a class action lawsuit. Although there are different schools of thought, for many employers, arbitration agreements have become the preferred method as they result in simpler and easier methods for resolving conflicts. This agreement states that an employee agrees to pursue any legal claims against the employers through arbitration rather than through a court of law.

Avoid litigation and expensive attorney's fees. The cost of hiring an attorney can run into thousands of dollars. With an arbitration, however, there is a reduction in attorney and legal fees and since it’s a less formal hearing than a court of law trial, the process is not only less time consuming but also less expensive for both parties involved.

Avoid class action lawsuits. With proper agreements in place for all employees, you can prohibit class action lawsuits against your company. Even though these agreements are ideal for many organizations, always make sure that you and your employees carefully read through the document to ensure you comply with the laws and have all the necessary clauses included, in order to protect your business from future legal claims.

Make sure a labor attorney reviews your arbitration agreement. Labor attorneys specialize in all issues regarding employment litigation. It is paramount that any such document be reviewed by legal counsel prior to giving your employees this document to sign.

Ask all of your new hires to sign an arbitration agreement at time of hire; in exchange, you are providing them with employment. By having your new hires sign the agreement, you are ensuring that your company is safe from any potential class action lawsuit. For existing employees, make sure that something is provided to them in exchange of signing the agreement (e.g., increase in pay). Although signing an arbitration agreement is voluntary, encourage your employees to sign these agreements as soon as possible. Again, please make sure such a document is reviewed by your legal counsel.